toulouse logoCase2014winner logoThis category in the EFMD Case Writing Competition, sponsored by Toulouse Business School – Groupe ESC Toulouse. 

Infineon Technologies: Time to Cash in Your Chips?” is the 2014 winner in the “Finance and Banking” category. It is written by Denis Gromb and Joel Peress, both at INSEAD, FR.

Set in late 2011, the case considers the cash holding and pay-out policy of Infineon (IFX), the large German semiconductor firm. Having just emerged from a period of distress and,restructuring, Infineon is sitting on a very large net cash position of €2.4bn, representing 40% of,its €5.9bn assets and €6bn in market capitalization. Much of this liquidity comes from a recent,surge in profits and the sale of the wireless communication unit. Infineon’s management has engaged in a review of its financial policy and has received conflicting advice from various quarters as to whether the company should part with some of its cash, how much, and through which payout method(s).

inseadThe first issue is whether Infineon benefits from holding onto substantial cash reserves. The characteristics of Infineon’s business post-restructuring are described: highly cyclical, capitalintensive, risky, intangible asset-based, etc. Hoarding cash offers a coarse but effective way to ensure continued investment through the cycle.

The second issue is which method for distributing cash Infineon should employ, assuming it does intend to disburse at least some of it. This is an opportunity to review leading methods for paying cash dividends and repurchasing shares, and how they relate to different rationales for paying out cash in the first place: adjusting the capital structure, exploiting mispricing, signalling, serving investor clienteles, etc.

Also the winning cases from the previous years in the “Finance and Banking” category may be of interest to you:
 
Tumi and the Doughty Hanson Value Enhancement Group”, IMD, Switzerland
The authors investigate some of the hottest issues in the private equity industry, in particular active ownership strategies; the current difficulties in managing exits, also known as the “portfolio constipation”; the progressive incorporation of corporate social responsibility agendas in the value creation plan of buyouts; and the relationship between private equity investors and the senior management of the company.

"Apple – Time to ‘Think Different™’ about cash?", Vlerick Business School, BE
This case explores Apple’s tax payments and investigates the company’s capital structure, cash position and dividend policy. All these elements have a significant impact on Apple’s value and on methods appropriate to gauge Apple’s valuation level.

Please do also consult the full list of winners for all 14 categories, it is on the EFMD website as well as details for the EFMD Case Writing Competition in general.

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